EUR/USD tumbles to fresh lows near 1.1020
|- EUR/USD drops to new 2-day lows in the 1.1020 area.
- USD-buying is fuelling the recovery in DXY.
- Key support comes in at 1.0990 (Monday/Tuesday low).
The selling pressure is now picking up pace around the European currency and is dragging EUR/USD to new 2-day lows in the 1.1020/15 band.
EUR/USD weaker on stronger Dollar
The pair has accelerated the daily downside on Friday after breaking below the 100-hour and the 200-hour SMAs in the 1.1040 region, all on the back of the renewed pick up in the demand for the buck.
The Greenback has reversed the initial pessimism and is now advancing to fresh tops in the mid-98.00s, putting spot under extra pressure. Additionally, it seems that sentiment improved further around the Greenback after another repo operation by the Fed saw funding pressures subside somewhat and the Fed Fund rate drop to 1.90%.
In the euro docket, German Producer Prices contracted at a monthly 0.5% during August and rose 0.3% over the last twelve months, missing (once again) initial estimates.
What to look for around EUR
The single currency is extending the choppy trading so far this week in the wake of the key FOMC gathering on Wednesday. EUR lost some shine following the recent peaks beyond 1.11 the figure, recorded after the ECB announced €20 billion/month in bond purchases under the re-launched QE programme. The occasional recovery in spot, however, is seen as corrective only always against the backdrop of unremitting slowdown in the region, looser for longer monetary conditions by the ECB and the likelihood that the German economy could slip into technical recession in Q3. Adding to this gloomy scenario, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit adds to the downbeat outlook.
EUR/USD levels to watch
At the moment, the pair is retreating 0.25% at 1.1013 and a break below 1.0990 (low Sep.16) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017). On the opposite side, the next up barrier lines up at 1.1109 (monthly high Sep.13) seconded by 1.1163 (high Aug.26) and finally 1.1175 (100-day SMA).
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